Funding Our Keiki’s Future: Is a constitutional amendment the answer?

This election, voters will have the chance to amend the state constitution. The ballot question, “Shall the legislature be authorized to establish, as provided by law, a surcharge on investment real property to be used to support public education?” has been the subject of heated debate. If the majority of votes cast and tallied for the question are yes votes (blank and over votes will count as “No”), the state constitution Article VIII, which reserves the power and duties of real property taxation for counties, will be amended to give the state legislature the power to “establish, as provided by law, a surcharge on investment real property.” Article VII, relating to education funding, would be amended to allow funds from the new surcharge to support public education.

The amendment itself would not implement the surcharge; those details would have to be negotiated in a legislative session, following the normal legislative process. Still, the proposed amendment, which could grant the state greater taxing power, signals both tremendous opportunity and serious risk. Here, we take a look at some of the different groups trying to shape public opinion on the proposed constitutional amendment and the rationale for their stances.

The County Council Questions the State

On Friday, Sep. 21, the council deliberated a resolution to urge an audit of the Hawai‘i State Department of Education. The resolution, transmitted by Councilmember Riki Hokama, was drafted in response to the ballot question.

“I’m not convinced that it’s just the money that’s the issue,” Hokama said in support of his resolution to urge the DOE audit. “I believe our people deserve to know, what is the reality of our Department of Education?” In a statement, Hokama elaborated, “the proposed Constitutional amendment ballot question, authorized by the State Legislature, fails to evaluate efficiency and effectiveness within the Department of Education.”

Discussion on the proposed resolution opened the floor for councilmembers to voice their many other concerns regarding the proposed amendment, including greater centralization of schools, fears of greater tax burdens on residents, andvague amendment language.

“Charter schools don’t get the same amount per child that the other schools get and yet they’re doing a lot with that money,” Councilmember Kelly King added. “I’ve been a big believer, since the ‘90s, in decentralization as bringing a lot of financial benefit to our schools directly. So I would like to see this happen before we start just piling money on top of money.”

Councilmember Yuki Lei Sugimura added, “We do not want to be taxed twice for real property, which is what it sounds like what they are trying to do.”

Councilmember Mike White took aim at the ambiguity of the constitutional amendment. “We don’t know what the surcharge is. We know that it’s gonna be applied to real property. We have no idea which real property.” White expressed worry that money added through a new tax could simply mean existing funds from other sources would be diverted.

“I understand why a lot of the people in the community who don’t interface with the legislature and don’t see the kinds of monkey-business that they engage in probably feel that this is all done fairly,” he added, “but in the dealings that we’ve had with the legislature we know that’s not always gonna be the case.”

White cited the Transient Accommodations Tax: “It started off as a temporary tax, but I never expected it to be used as a tool on Maui to fund rail on O‘ahu… We’re generating over $200 million just from Maui County; we get back $23.5 million.

Meanwhile, White said, the real property tax is the county’s only exclusive taxing power. “We’re having to continually increase our taxes because we don’t get a share of the TAT that we should get, so we’re left basically asking our residents to pay for expenses incurred on behalf of our visitors even though they’ve already paid at the pump and in TAT. “

“So it’s in that frame of reference,” said White, “that we make this request [to audit the DOE]. I see nothing but trouble with this constitutional amendment because it is so vague and it leaves the legislature with such an incredibly open field without any guarantee about where that money is gonna go.”

The council voted with eight ayes and one excused to pass the resolution to urge the state to audit the DOE.

Rep. McKelvey would not make any guarantees about the terms of a surcharge that could be levied if the constitutional amendment is approved

State Representatives Make No Guarantees

At a Monday, Sep. 24 public forum about the ballot question, State Rep. Angus McKelvey seemed to agree with White’s characterization of the risks. “I gotta be honest with you: I can’t put odds on anything happening in that crazy building,” he said, when asked about the possibility that the constitutional amendment could result in a surcharge that hurts working families.

He cited the Transient Accommodations Tax. “I co-signed the TAT for education bill, voted up on it – still got steamrolled. I mean I was there the whole way, signed the bill, pushed for it, voted for it on the floor, guess what: the O‘ahu legislators who outnumber us pretty much just steamrolled it through. I cannot sit here and tell you guys, ‘yes, definitely’ because I don’t have the ability to make a promise in front of 36 O‘ahu legislators.”

Rep. Justin Woodson was more hopeful that a good piece of legislation could be produced. “I was the chairman that actually crafted the current language in the state legislature,” he told me. “We changed the language because we wanted the legislature to have the maximum flexibility to make adjustments if in fact the proposal was ratified.”

The discussion that produced the final language of the ballot question shows the need for this flexibility, he said. Originally, the question was more specific and “the discussion was around investment properties defined as properties that people do not live in and are of a market value of $1 million to $1.5 million.”

Since then, his view has evolved. “My new thought process is actually to go after illegal vacation rentals,” he said, “so no matter what the market value is, if this proposal is actually adopted by the people, that’s where I would like to start the discussion as chairman of the committee.” If the original, more specific language of the question was preserved, he explained, they wouldn’t be able to go after illegal vacation rentals under $1 million, which represents lots of potential tax revenue.

“The language as it is drafted right now is drafted for maximum flexibility” Woodson said. “You need to have some wiggle room.”

The resolution passed by the county to urge the audit, Woodson stated, is just a sideshow. “To suggest that through an audit you are going to find enough efficiencies to meet the demand of the statewide system is asinine. The budget for the DOE is $1.99 billion. It’s very multifaceted, but if you just take a sliver of that and look at facilities, we know that most classrooms need AC. That’s gonna cost at least $400 million right there. Besides that, we know that infrastructures are old in classrooms, we know that we need to build entire new campuses. Maui, we’re going to need at least two elementary schools and one middle school in the near future. You can’t say you’re gonna audit and then find $1 billion of inefficiencies to address that.”

McKelvey acknowledged that if the power to implement the surcharge were given to the legislature, responsibility would fall on legislators to ensure the actual bill didn’t incur any unintended consequences.

“If it passes, my commitment to you is that we’re going to have a whole lot of meetings like this as the bill moves through the legislative process to hash out all of the details,” he said. “It’s to make sure this thing is crafted to do no harm, to get the benefits.

When adjusted for cost of living, Hawai‘i teachers are the lowest paid in the nation

Teachers Can’t Wait

For the Hawai‘i State Teachers Association and many teachers, the need for funding is so dire that the risks of the constitutional amendment are well worth the potential benefits. John Fitzpatrick, a 7th grade teacher at Maui Waena Intermediate with two side jobs, told me he regularly works 60-hour weeks. “If the things that you don’t like are in that bill,” he told a local resident at the public forum concerned about excessive taxation, “that’s where you fight. If in that bill all those things are coming through, that’s where we fight together. My opinion as a teacher is that the benefits far outweigh the risks.”

The HSTA cites a number of sobering findings, including that Hawai‘i teachers are the lowest paid in the nation when adjusted for cost of living. Low teacher pay makes it difficult to train and retain teachers, they say, resulting in a shortage of more than 1,000 teachers. This and other factors contribute to Hawai‘i’s ranking as one of the worst states to be a teacher. But it isn’t just about pay: According to the Department of Business, Economic Development and Tourism, Hawai‘i spends the lowest percentage of county and state funds on education in the country and when adjusted for cost of living, Hawai‘i ranks 45th in the nation in per pupil spending.

While the language of the con am doesn’t guarantee it, the HSTA’s intent is to stick the bill to investment properties and raise money from wealthy nonresidents. “Trump Towers was able to sell out $700 million worth of property in one a day. If these people can afford $700 million in property, they can find a way to fund our schools,” HSTA President Corey Rosenlee said. “Hawai‘i has become a haven for outside millionaires and luxury developers who treat our aina like a commodity. If the 1 percent want to call Hawai‘i home then they should be giving back – and that starts with paying their fair share to ensure our children get the quality education they deserve.”

For teacher Justin Hughey, this opportunity for the public to vote for better education funding should be seized. “This is the first solution to the problem that has existed since 1911: too few teachers, dilapidated buildings, meager funding,” he told me. “This is the first time our community can say, ‘yes, our keiki deserve better.’”

“Not being able to get that personal connection you would get at a small school is really important to me,” Fitzpatrick said, “and that’s why we should be properly funding education and if it costs private schools twice as much [per pupil] to deliver a quality education, why aren’t we asking ourselves to fund education and give that same opportunity to our public school students.”

Ashley Olson, a well qualified teacher with a master’s degree, teaches Spanish at Lahainaluna High School and has been a teacher since 1993. “My name was drawn for the lottery at Kahoma Village and given the delays with that and rising interest rates I’m about to be priced out of affordable workforce housing,” she said. “I won’t be able to qualify for a mortgage.”

Victoria Zupancic, a math teacher who works a second job at a hotel, stated that it isn’t just about pay. “For the first month of school even up until now we have not been able to purchase supplies with school funding… New teachers that are brand new to Maui and come to Lahainaluna had to go to the PTSA to get a donation of gift cards so they could get the pens they need. I asked for donations of paper. We don’t have the available funding to not have that worry when we walk in the door because it is so tight.”

The result is that students are unprepared and miss opportunities. “To expand our great music program we had to cut a science line. We‘re not able to just offer the things to our students that they deserve,” Zupancic said. “When you work at a restaurant with your students, grinding it out past 11pm, they don’t look up to us like ‘that’s a life I want,’ so it’s just really unfortunate that we can’t be more of a role model to them. Instead when they walk into the door it’s like, ‘I hope we can have paper today.’”

Zupancic remembered the Monday after the August Lahaina fires. ”200 volunteers from the community had to come up here to wash out the ash from the fire and clean, and that is the DOE’s responsibility to make sure we come back to safe working conditions. But who’s doing it: the teachers, the community… these are conditions that are not OK for students.”

For Matt Dillon, Principal at Iao Intermediate School, the state legislature is far removed from his daily responsibilities. “I don’t have an opinion one way or another about how the money is obtained from the state,” he told me. “From a principal’s point of view and trying to operate a school, I wouldn’t say that we’re under-resourced or under-funded but we can always do better.”

He added, “More funding would always be put to good use for our students. If we were funded more we could add a layer of service to our students but I feel like we are doing a great job of it now with whatwe are given… But we are growing, our community’s growing and one way or another we’re going to need more schools. You can’t avoid that… Right now it’s about let’s take what we get and make the best of it. Any way that we can support education is gonna be beneficial for our communities.”

Steve Franz, Principal of King Kamehameha III Elementary, has worked at the school since 1996. Like Dillon, he stated that he didn’t have an opinion on the constitutional amendment.

However, he was willing to talk about his experiences regarding funding in the DOE. “The issues that I have now are not new,” he said. “I’ve been with the DOE for about 20 years now as a teacher and as an administrator and the things that I see that are problems now are the same kinds of things that were going on when I started. They just seem to be getting worse, especially on the West Side.”

“Staffing is probably the biggest one that impacts kids the most,” he elaborated. His school deals with a turnover rate of about 15 percent. Often, he gets applicants from the mainland who leave for a number of reasons including the high cost of living and relatively low pay. Even local teachers often choose to work in other parts of the island where housing is cheaper. “Half your paycheck or more is going to rent and you don’t have money for anything else. So it’s hard to get people and then keep them.”

Additionally, Franz said, facilities have not been maintained over the years and schools are getting overcrowded without new construction of buildings and schools.

“We had a remodel at our school three to four years ago,” he said, “but prior to that we had issues that were taking years to resolve, like more than one leaky roof.”

“It all comes down to money,” said Franz. “What I know is that the way things have been funding now has been going on for a long time – I know that the DOE is haggling for money with every other department that wants money with whatever they’re doing for the state. Most places use other funding sources for the schools.”

“The bottom line for me is, I don’t know if the amendment is the answer but something needs to change. I have some concerns with the government. You give them more money and they’ll waste more money or they’ll redirect it,” Franz said.